Correlation Between Air Products and BTC Digital

Can any of the company-specific risk be diversified away by investing in both Air Products and BTC Digital at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Air Products and BTC Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Air Products and and BTC Digital, you can compare the effects of market volatilities on Air Products and BTC Digital and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Air Products with a short position of BTC Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and BTC Digital.

Diversification Opportunities for Air Products and BTC Digital

0.55

Correlation Coefficient

Air Products  BTC Digital

Very weak diversification

The 3 months correlation between Air and BTC is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and BTC Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTC Digital and Air Products is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Air Products and are associated (or correlated) with BTC Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTC Digital has no effect on the direction of Air Products i.e., Air Products and BTC Digital go up and down completely randomly.

Pair Corralation between Air Products and BTC Digital

Considering the 90-day investment horizon Air Products and is expected to generate 0.08 times more return on investment than BTC Digital. However, Air Products and is 12.83 times less risky than BTC Digital. It trades about -0.07 of its potential returns per unit of risk. BTC Digital is currently generating about -0.32 per unit of risk. If you would invest  31,588  in Air Products and on September 15, 2024 and sell it today you would lose (499.00) from holding Air Products and or give up 1.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Air Products and  vs.  BTC Digital

Air Products

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Air Products and are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Air Products may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BTC Digital

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BTC Digital are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, BTC Digital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Air Products and BTC Digital

The main advantage of trading using opposite Air Products and BTC Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, BTC Digital can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BTC Digital will offset losses from the drop in BTC Digital's long position.

The idea behind Air Products and and BTC Digital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Technical Analysis module to check basic technical indicators and analysis based on most latest market data.